What is the primary goal of macroeconomic stabilization policy?

Accordingly, the primary goal of macroeconomic stabilization policies should be to achieve stable economic growth. This key policy objective is complemented by the need to stabilize intermediate variables that can have a strong impact on growth.

What is stabilization measure in economics?

Stabilization measure (policy) is a package or set of measures introduced to stabilize a financial system or economy. Fiscal policy deals with taxation and government spending and is often administered by and execut under laws of a legislature and mainly has a direct impact on the goods market.

What are the macroeconomic stability measures?

Macroeconomic stability exists when key economic relationships are in balance—for example, between domestic demand and output, the balance of payments, fiscal revenues and expenditure, and savings and investment.

What are the two primary objectives of macroeconomic stabilization policy?

Stabilizing economic activity and price stability are the two primary objectives of macroeconomic stabilization policy.

What is the role of stabilization policy?

Stabilization policy is a strategy enacted by a government or its central bank that is aimed at maintaining a healthy level of economic growth and minimal price changes. In the language of business news, a stabilization policy is designed to prevent the economy from excessive “over-heating” or “slowing down.”

What are the two types of macroeconomic policies?

The three main types of government macroeconomic policies are fiscal policy, monetary policy and supply-side policies. Other government policies including industrial, competition and environmental policies.

What are the 4 macroeconomic objectives?

A look at the main macroeconomic objectives (economic growth, inflation and unemployment, government borrowing) and possible conflicts between these different macro-economic objectives.

What is the purpose of an economic stabilization policy?

Economic stabilization policies are macroeconomic policies implemented by governments and central banks in an attempt to keep economic growth stable and less volatile.

Which is the primary goal of macroeconomic stability?

Accordingly, the primary goal of macroeconomic stabilization policies should be to achieve stable economic growth. This key policy objective is complemented by the need to stabilize intermediate variables that can have a strong impact on growth.

How is stabilization policy related to Keynesian economics?

Stabilization Policy and Keynesian Economics. Keynes suggested that through policy creation, a government could manipulate aggregate demand to correct the trend. Top economists believe that as economies become more complex and advanced, maintaining a steady price level and pace of growth are essential for long-term prosperity.

How is monetary stabilization policy analyzed in ScienceDirect?

Monetary stabilization policy is also analyzed here under the assumption (made explicit in the welfare-based analysis introduced in Section 3) that a nondistorting source of government revenue exists, so that stabilization policy can be considered in abstraction from the state of the government’s budget and from the choice of fiscal policy.